Long-time readers of the FinLab blog know that our first-year FinLab companies met with the White House in December to talk about how FinTech innovations can improve consumer financial services in the U.S. We are happy to report that the conversation has not just continued – but has, in fact, accelerated. There is an increasing recognition among our country’s most senior policy makers that both for-profit and not-for-profit innovators in financial services are creating products that are improving the financial health of all Americans.
Perhaps the best indication of this was last Friday White House FinTech Summit. The meeting featured the some of the country’s top investors, prominent CEOs, startup founders, and leading policymakers. CFSI and its FinLab companies were honored to participate. The day was broken into a number of sessions, each moderated by a senior government leader:
—Penny Pritzker, the Secretary of Commerce, led a deep-dive exploration into the Government’s role in fostering FinTech Innovations, which featured Adam Carson, the Managing Director of Global Technology Strategy and Partnerships at JPMorgan Chase (and close advisor to a number of FinLab companies).
—Mark Walsh, of the Small Business Administration, led a lively discussion about the state of Small Business Lending and FinTech. Jon Zanoff of Empire Startups – and a long-time friend of the Lab – was able to eloquently describe the challenges that many startups, themselves small businesses, face in navigating the legal and regulatory complexities required to serve this market.
—Jason Furman, the Chairman of the Council on Economic Advisors led a discussion on FinTech and Financial Health that featured Quinten Farmer, the President and Co-Founder of Even, one of last year’s Lab winners, and Ida Rademacher, of the Aspen Institute’s Financial Security Program. This panel was particularly exciting for those of us at CFSI and our network members, as a number of panelists spoke about they’ve worked with CFSI to build the financial health of their customers.
—Finally, I joined a panel moderated by Gayle Smith, the USAID Administrator which also featured Jo Ann Barefoot, Senior Fellow at the Harvard Kennedy School and the Vice Chair of CFSI’s Board; Greta Bull, the CEO of CGAP; Franz Paasche of PayPal (a CFSI Network Member); and Vikas Raj of Accion (a member of the FinLab Advisory Council). Our panel dug into the potential of FinTech to serve as a powerful force for development and financial inclusion, both in the U.S. and globally.
CFSI’s Ryan Falvey, fourth from the left, participates on a panel about the role of fintech in improving financial inclusion at the White House. Photo credit: Sheel Mohnot.
Taken together, I left the event feeling energized about our work and excited about the opportunity that the Financial Services industry has to leverage technology to improve products, expand access and promote financial health. I also had a few big takeaways:
1. Improving Consumer Financial Health should be a goal of all financial services providers.Panelist after panelist spoke about financial health as a positive outcome of the industry. While we see this in our rapidly growing network of providers, increasing numbers of Lab applicants and record-breaking conference attendees, it’s clear that this message has been internalized by a much broader universe of stakeholders. It’s increasingly seen as a competitive differentiator.
2. There is growing recognition that FinTech might require entirely new approaches to regulation compared to how the government has traditionally approached the banking sector. In conversation after conversation there was growing recognition that FinTech might be a welcome source of competition in the financial services industry and, perhaps, innovation should be encouraged via reduced regulatory requirements in some circumstances, innovation sandboxes and greater regulatory engagement.
3. Consumer Data Access is going to become an increasingly dominant issue in financial services for the near term. Certainly the most contentious point of the day came during discussions of consumer data access and the blunt language of Section 1033 of the Dodd Frank Act – which says consumers own their data. Don’t expect this issue to go away. We don’t.
4. This is a global issue. This sounds obvious to those of us in the industry, but we’re seeing the beginnings of a global industry where the U.S. has a natural competitive advantage – sorry, London and Hong Kong – and that perhaps it’s an industry that policy makers should help to nurture and support. I don’t think we’re too far away from the day when our policymakers see FinTech as a source of competitive advantage in the global economy – and FinHealth as a policy goal of the global economy.
Overall, I thought the event marked an important inflection point in how our regulatory and policy framework will support this industry. I doubt anything will happen quickly – it’s the government, after all – but I remain bullish that we’re still at the earliest stages of secular change in the U.S. financial services industry to one that is more fair, transparent and responsive to the increasingly complex consumer demand of the 21st Century. Regardless of whether you’re a larger player or an early stage startup, there has probably never been a better time to start innovating.
P.S. This week is CFSI’s Emerge Conference. If you’re going to be here, say hi! If you’re not, it’s not too late to book a last-minute ticket and continue the conversation in New Orleans. In any case, make sure you follow along on Twitter with #EMERGEForum16.